This dissertation explores the institutional reason of failed government downsizings and related issues of weakening social service systems in China. With the institutional approach, it observes the bloating size of government employment from the evolution of the traditional workplace (danwei ) system, especially the process of its disintegration in the reform era. The author argues that the surprising steady growth of government employment in China, or the "runaway state building", is the natural outcome the disintegration of the workplace (danwei) system, i.e. the decollectivization of the collectively-owned people's communes in the countryside, and the reform of state-owned enterprises (SOEs) in urban areas. This disintegration is a deinstitutionalization process of the existing well-functioned, though inefficient, social welfare system which has been covering the majority of Chinese since pre-reform era. This disintegration created a vacuum of public services and community administration, which has to be filled by the government. To illustrate the major institutional reason of failed government downsizings, the author analyzes the loosing institutional control in China's bureaucratic system at the workplace (danwei) level. The decentralization in the reform era bestowed too much institutional and financial capacities to state-owned workunits (danwei), which led to the widespread abuse of off-budgetary funds and slush funds, together with the out of control organizational development of danwei. Since there is no effective way to cut the size of government employment, the downsizing efforts are connected more with changes of political leadership and shifting financial burdens to the lower level governments than the proclaimed goal of government restructuring: organizational streamline. The author further states that due to the inefficient institutional design and wasteful bureaucratic culture in spending public funds, the state-owned social services based on the workplace (danwei ) system, including public education and health care, are prohibitively expensive for a large number of ordinary people, and are thus inappropriate in providing these essential services. It is hence necessary to get the omnipresent state to withdraw from these areas and to build or rebuild an institutional capacity to provide various forms of public goods to the majority of Chinese people, especially peasants in the countryside, migrant workers from rural areas and laid-off workers of SOEs. Since even the market could hardly be of much help in this aspect, a partial resumption of collectively-owned danwei system in the countryside might not only be a way out for China's current distress in social welfare services, but also a practical solution to the continuous failure of the government reforms.
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